Making sugar sweet for all

It is really shocking that our lawmakers are totally clueless about how to resolve the current sugarcane farmers’ crisis which has gripped the nation. What is even more perplexing is that the permission has been accorded to 41 new factories in Karnataka besides many other states on the premise of increasing demand and providing competitive prices to the farmers.  This comes at a time when 189 mills were out of operation in the country in 2013-14, in spite of huge incentives and subsidies showered on them.

The reasons for current agrarian crisis are both natural and man-made.  The main natural culprit is the monsoon, which determines the quantity and quality of the sugarcane yield.  While we cannot control the nature, we can certainly address how we respond to it and we can also resolve the human causes. All the three stake holders in sugar industry - the lawmakers, mill owners and farmers - have equally contributed to the current disaster.  

The successive governments have failed in agro planning and risk management, and it has resulted in the unpredictable and cyclical nature of sugar production. While huge funds are spent for incentives and subsidies, they have failed to put up a credible micro-credit system to the farmers.  Policies like levy sugar obligations and arbitrary fixation of cane prices have been bleeding the sugar mills and there is no quality control which can enhance the sugar exports.

While location of sugar industries in certain regions are not satisfactory, majority of them have not created a hedge to sustain the production.  They have no means to control the quantity or quality of sugarcane supplied by the farmers. Their profitability is also affected by the short crushing season and their inability to utilise the by-products like molasses and bagasse. Most of the farmers are small and marginal, often with unclear title holding and are not united through proper farm cooperatives.  It is difficult for them to obtain institutional credit, thus forcing them to approach private lender who charge hefty interest rates.

Various supportive prices have pushed the farmers to a comfort zone, which in turn has resulted in mono-cropping, unscientific farming, imbalanced fertilizer and pesticide use, which in reality, are rendering the land less productive.

Only a multi-pronged approach on a war footing can resolve this calamity. The government has to become pro-active in agro-planning and advice the farmers what to grow and how much to grow, based on the nature of the soil, water availability, buffer stocks, production capacity of the mills and international scenario.  

Such a planning not only helps the government to balance the demand and supply, it will also facilitate extension services, water conservation and risk management.  Mono-cropping must be avoided by providing incentives and subsidies for alternate crops.  Farmers should be prevented from exploitation by private lenders by providing micro-credit, investment and interventions through kisan credit card, which can be recovered during the sales. The government must obtain a bank surety, letter of credit, or cash deposit from sugar mills before the crushing season begins and distribute it to the farmers, if the mills default. Ethanol blending and co-generation of power by sugar mills should become rule rather than exception. A robust quality control authority should be setup to enhance exports.

Assured procurement

The sugar mills and the farmers have to be brought under gambit of contract farming, which confers benefits to both farmers and mills, for ensuring assured and remunerative prices to the farmers by way of assured procurement of the sugarcane of desired quality from the farmers at a pre- determined price, either at a fixed rate or formula.

The model APMC Act, 2003 addresses the contract farming issues and is already in place in several states including Karnataka and waives the registration fee for such contracts.  Several private companies like M/s Pepsi Foods Pvt Ltd, Tata,  Rallies, Mahindra, Shubh Labh etc have already entered into partnerships with farmers and providing inputs, R & D and extension support, credit, processing services and marketing avenues and these success stories can be replicated.

Unlike the Sugar Mill Association, the current farmer unions have no teeth due to lack of financial or political backup and therefore, it is time they get united to form strong farm cooperatives. Cooperatives can own the technology and machines, share the labour and technology, and do team work on their farms to decrease the farm overheads and transaction costs. Cooperatives increase the collective strength of the farmers and enhance the bargaining power and therefore can tap high value markets. Capacity building and implementation of extension programmes becomes easy.

(The writer is Professor, Basaveshwara Medical College & Hospital, Chitradurga, Karnataka)